Which stage in the strategy-formulation framework focuses on generating feasible

Strategic Management: A Competitive Advantage Approach, 17e (David/David) Chapter 6 Strategy Analysis and Choice

1. Strategy analysis and choice largely involves making ________ decisions based on ________ information. A) long-term; short-term B) subjective; objective C) short-term; long-term D) subjective; short-term E) objective; subjective Answer: B Diff: 2 LO: 6: Describe the strategy analysis and choice process. AACSB: Analytical thinking

2. An organization's present strategies, objectives, vision, and mission, coupled with the external and internal audit information, provide a basis for A) generating structural strategies, but not evaluating those strategies. B) evaluating structural strategies, but not generating those strategies. C) generating feasible alternative strategies, but not evaluating those strategies. D) evaluating feasible alternative strategies, but not generating those strategies. E) generating and evaluating feasible alternative strategies. Answer: E Diff: 2 LO: 6: Describe the strategy analysis and choice process. AACSB: Analytical thinking

3. An organization's present strategies, objectives, vision, and mission, coupled with the external and internal audit information, provide a basis for generating and evaluating feasible alternative strategies. Answer: TRUE Diff: 1 LO: 6: Describe the strategy analysis and choice process. AACSB: Analytical thinking

4. Alternative strategies don't come out of the blue; they are derived from the firm's vision, mission, objectives, external audit, and internal audit. Answer: TRUE Diff: 1 LO: 6: Describe the strategy analysis and choice process. AACSB: Analytical thinking

5. It is vital that strategists always consider all feasible alternatives that could benefit the firm. Answer: FALSE Diff: 2 LO: 6: Describe the strategy analysis and choice process. AACSB: Analytical thinking

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1. Strategy analysis and choice largely involves making subjective decisions based on objective information. Answer: TRUE Diff: 2 LO: 6: Describe the strategy analysis and choice process. AACSB: Analytical thinking

2. Which stage in the strategy-formulation framework focuses on generating feasible alternative strategies? A) Input B) Output C) Decision D) Throughput E) Matching Answer: E Diff: 2 LO: 6: Diagram and explain the three-stage strategy-formulation analytical framework. AACSB: Analytical thinking

3. Which stage of the strategy-formulation framework involves the Quantitative Strategic Planning Matrix? A) Stage 1 B) Stage 2 C) Stage 3 D) Stage 4 E) Stage 5 Answer: C Diff: 2 LO: 6: Diagram and explain the three-stage strategy-formulation analytical framework. AACSB: Analytical thinking

4. Which stage of the strategy-formulation framework includes an IFE Matrix and the Competitive Profile Matrix? A) Input B) Matching C) Decision D) Penetration E) Research Answer: A Diff: 2 LO: 6: Diagram and explain the three-stage strategy-formulation analytical framework. AACSB: Analytical thinking

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1. The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix, and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework. Answer: TRUE Diff: 2 LO: 6: Diagram and explain the three-stage strategy-formulation analytical framework. AACSB: Analytical thinking

2. Good intuitive judgment is always needed to determine appropriate weights and ratings in the input stage matrices. Answer: TRUE Diff: 2 LO: 6: Diagram and explain the three-stage strategy-formulation analytical framework. AACSB: Analytical thinking

3. When completing the matching stage of the strategy-formulation framework, the SWOT Matrix needs to be completed before the SPACE Matrix. Answer: FALSE Diff: 2 LO: 6: Diagram and explain the three-stage strategy-formulation analytical framework. AACSB: Analytical thinking

4. To objectively evaluate feasible alternative strategies identified in Stage 1, the Quantitative Strategic Planning Matrix (QSPM) uses input information derived from Stage 2. Answer: FALSE Diff: 2 LO: 6: Diagram and explain the three-stage strategy-formulation analytical framework. AACSB: Analytical thinking

5. Explain the concept of matching in the strategy-formulation framework. Answer: Stage 2 of the strategy-formulation analytical framework is called the matching stage. It focuses on generating feasible alternative strategies by aligning key external and internal factors. Diff: 2 LO: 6: Diagram and explain the three-stage strategy-formulation analytical framework. AACSB: Analytical thinking

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1. Which section of the SWOT Matrix involves matching internal strengths with external opportunities? A) The WT cell B) The SW cell C) The WO cell D) The ST cell E) The SO cell Answer: E Diff: 1 LO: 6: Construct and apply the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix. AACSB: Analytical thinking

2. Which strategies aim at improving internal weaknesses by taking advantage of external opportunities? A) SO B) WO C) SW D) ST E) WT Answer: B Diff: 1 LO: 6: Construct and apply the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix. AACSB: Analytical thinking

3. Which strategies are defensive tactics directed at reducing internal weaknesses and avoiding external threats? A) SO B) WO C) SW D) ST E) WT Answer: E Diff: 1 LO: 6: Construct and apply the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix. AACSB: Analytical thinking

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1. Strengths-opportunities strategies are based on using a firm's internal strengths to take advantage of external opportunities. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix. AACSB: Analytical thinking

2. A SWOT Matrix is composed of four cells for the four types of strategies it creates. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix. AACSB: Analytical thinking

3. One of the steps of the SWOT Matrix is to list the firm's key external opportunities. Answer: TRUE Diff: 1 LO: 6: Construct and apply the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix. AACSB: Analytical thinking

4. The SWOT matrix, if used appropriately, does not have any limitations. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix. AACSB: Analytical thinking

5. Which of these is NOT a SPACE Matrix quadrant? A) Aggressive B) Defensive C) Competitive D) Offensive E) Conservative Answer: D Diff: 2 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

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1. The two internal dimensions represented on the axes of the SPACE Matrix are A) stability position and industry position. B) industry position and internationalization. C) internationalization and competitive position. D) competitive position and financial position. E) financial position and stability position. Answer: D Diff: 2 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

2. What are the two external dimensions of the SPACE Matrix? A) Stability position and industry position B) Stability position and competitive position C) Industry position and competitive position D) Competitive position and financial position E) Financial position and industry position Answer: A Diff: 2 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

3. The two positive-rated dimensions on the SPACE Matrix are A) FP and CP. B) CP and SP. C) FP and IP. D) IP and SP. E) FP and SP. Answer: C Diff: 3 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

4. What type of strategies would you recommend when a firm's SPACE Matrix directional vector has the coordinates (-2, +3)? A) Aggressive B) Conservative C) Competitive D) Defensive E) Integrative Answer: B Diff: 3 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

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1. The firm should pursue conservative strategies if the coordinates of a SPACE directional vector are (-1, +4). Answer: TRUE Diff: 3 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

2. A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (+2, +3). Answer: FALSE Diff: 3 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

3. The firm should pursue aggressive strategies if the coordinates of a SPACE directional vector are (+5, +4). Answer: TRUE Diff: 3 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

4. What are two of the strategies that you might recommend, if the Strategic Position and Action Evaluation (SPACE) Matrix directional vector points to the lower left quadrant? Answer: Students should suggest defensive strategies such as retrenchment, divestiture, liquidation, and related diversification. Diff: 3 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

5. Give five sets of coordinates of SPACE Matrix directional vectors that would suggest conservative strategies to be most appropriate. Answer: Student answers will vary. However, five examples they may suggest are (-1, 1), (-2, 2), (-3, 3), (-4, 4), and (-5, 5). Any pair of coordinates with a negative x-coordinate and a positive y-coordinate is correct, in other words, any pair of coordinates that describe a point in the upper- left quadrant. Diff: 3 LO: 6: Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. AACSB: Analytical thinking

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1. The Boston Consulting Group (BCG) Matrix is designed specifically to enhance which type of firm's efforts to formulate strategies? A) Companies with more than one division B) Large companies C) Companies with annual sales greater than $1 million D) Companies with annual sales of less than $1 million E) All companies Answer: A Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

2. In the Boston Consulting Group (BCG) Matrix, which element represents the industry growth rate in sales, measured in percentage terms? A) X-axis B) Y-axis C) First quadrant D) Second quadrant E) Third quadrant Answer: B Diff: 3 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

3. In the Boston Consulting Group (BCG) Matrix, how would a division with a low relative market share position in a high growth industry be described? A) Question Mark B) Cash Cow C) Star D) Stuck-in-the-middle E) Dog Answer: A Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

4. In the BCG Matrix, when a division of an organization has a high relative market share and is in a fast-growing industry, it is called a A) Star. B) Cash Cow. C) Cat. D) Question Mark. E) Dog. Answer: A Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

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1. All of the following are limitations of the Boston Consulting Group (BCG) Matrix EXCEPT A) viewing every business as a star, cash cow, dog, or question mark can be an oversimplification. B) the matrix requires at least three years worth of data. C) the matrix does not reflect divisional or industry growth over time. D) the matrix does not allow a company to be classified as somewhere in between two categories. E) variables such as size of market and competitive advantages are not considered in the Matrix. Answer: B Diff: 3 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

2. Relative market share position is given on the x-axis of the Boston Consulting Group (BCG) Matrix. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

3. Industry growth rate is given on the x-axis of the Boston Consulting Group (BCG) Matrix. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

4. The midpoint on the x-axis of a Boston Consulting Group (BCG) Matrix is typically set at

1. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

1. The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

2. The pie slice in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

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1. In a BCG Matrix the y-axis represents the industry growth rate. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

2. Stars, Question Marks, Cash Cows, and Dogs are the four quadrants exhibited by the Boston Consulting Group (BCG) Matrix. Answer: TRUE Diff: 1 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

3. Cash Cows represent the organization's best long-run opportunities for growth and profitability. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

4. The major benefit of the Boston Consulting Group (BCG) Matrix is that it draws attention to the cash flow, investment characteristics, and needs of an organization's various divisions. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

5. Viewing every business as either a Star, Cash Cow, Dog, or Question Mark is an oversimplification. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

6. The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

7. Having no temporal qualities, the BCG Matrix is a snapshot of an organization at a given point in time. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Boston Consulting Group (BCG) Matrix. AACSB: Analytical thinking

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1. Both the Internal-External (IE) and Boston Consulting Group (BCG) Matrices are called ________ matrices. A) portfolio B) security C) strategy D) vector E) velocity Answer: A Diff: 2 LO: 6: Construct and apply the Internal-External (IE) Matrix. AACSB: Analytical thinking

2. Both the Internal-External (IE) and Boston Consulting Group (BCG) Matrices are called portfolio matrices. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Internal-External (IE) Matrix. AACSB: Analytical thinking

3. The Boston Consulting Group (BCG) Matrix requires more information about the divisions than the Internal-External (IE) Matrix. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Internal-External (IE) Matrix. AACSB: Analytical thinking

4. On the x-axis of the IE Matrix, an IFE total weighted score of 2 represents a weak internal position. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Internal-External (IE) Matrix. AACSB: Analytical thinking

5. The IE Matrix can be divided into three major regions that have different strategy implications: grow and build; hold and maintain; and harvest or divest. Answer: TRUE Diff: 2 LO: 6: Construct and apply the Internal-External (IE) Matrix. AACSB: Analytical thinking

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1. Compare and contrast the Internal-External (IE) Matrix with the Boston Consulting Group (BCG) Matrix. Answer: The IE Matrix is similar to the BCG Matrix in that both tools involve plotting organizational divisions in a schematic diagram. Also, the size of each circle represents the percentage sales contribution of each division, and pie slices reveal the percentage profit contribution of each division in both the BCG and IE Matrix. There are four important differences between the BCG Matrix and the IE Matrix: 1) different axes; 2) the IE Matrix requires more information about the divisions than the BCG Matrix; 3) the strategic implications of each matrix are different; and 4) the IE Matrix has nine quadrants versus four in a BCG Matrix. Diff: 3 LO: 6: Construct and apply the Internal-External (IE) Matrix. AACSB: Analytical thinking

2. What analytical tool has four quadrants based on two dimensions: competitive position and market growth? A) Competitive Profile Matrix (CPM) B) Internal-External (IE) Matrix C) Strategic Position and Action Evaluation (SPACE) Matrix D) Grand Strategy Matrix E) Quantitative Strategic Planning Matrix (QSPM) Answer: D Diff: 2 LO: 6: Construct and apply the Grand Strategy Matrix. AACSB: Analytical thinking

3. Firms located in which quadrant of the Grand Strategy Matrix are in an excellent strategic position? A) I B) II C) III D) IV E) V Answer: A Diff: 2 LO: 6: Construct and apply the Grand Strategy Matrix. AACSB: Analytical thinking

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1. According to the Grand Strategy Matrix, organizations in which quadrant have a strong competitive position, but are in a slow-growth industry? A) I B) II C) III D) IV E) V Answer: D Diff: 1 LO: 6: Construct and apply the Grand Strategy Matrix. AACSB: Analytical thinking

2. The Grand Strategy Matrix is based on two evaluative dimensions, market share and market growth. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Grand Strategy Matrix. AACSB: Analytical thinking

3. When a firm located in Quadrant I of the Grand Strategy Matrix is too heavily committed to a single product, related diversification may be appropriate to reduce the risks associated with a narrow product line. Answer: TRUE Diff: 3 LO: 6: Construct and apply the Grand Strategy Matrix. AACSB: Analytical thinking

4. According to the Grand Strategy Matrix, Quadrant III organizations compete in rapid-growth industries and have strong competitive positions. Answer: FALSE Diff: 2 LO: 6: Construct and apply the Grand Strategy Matrix. AACSB: Analytical thinking

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1. Using a Grand Strategy Matrix approach, what strategies are recommended for a firm that is a weak competitor in a slow-growing market? Elaborate on what these strategies could mean for a college or university. Answer: A firm that is a weak competitor in a slow-growing market would be located in Quadrant III. These firms must make some drastic changes quickly to avoid further decline and possible liquidation. Extensive cost and asset reduction (retrenchment) should be pursued first. An alternative strategy is to shift resources away from the current business into different areas (diversify). If all else fails, the final options for Quadrant III businesses are divestiture or liquidation. Students should mention that the college or university could possibly have to be closed. Faculty and/or staff might have to be greatly reduced, which could lead to unhappy students in very large classes. Diff: 3 LO: 6: Construct and apply the Grand Strategy Matrix. AACSB: Application of knowledge

2. The top row of a Quantitative Strategic Planning Matrix (QSPM) consists of alternative strategies derived from all of the following EXCEPT A) Grand Strategy Matrix. B) Boston Consulting Group (BCG) Matrix. C) Strategic Position and Action Evaluation (SPACE) Matrix. D) Competitive Profile Matrix (CPM). E) Internal-External (IE) Matrix. Answer: D Diff: 2 LO: 6: Construct and apply the Quantitative Strategic Planning Matrix (QSPM). AACSB: Analytical thinking

3. Which analytical tool determines the relative attractiveness of various strategies based on the extent to which key external and internal critical success factors are capitalized upon or improved? A) Boston Consulting Group (BCG) Matrix B) Strategic Position and Action Evaluation (SPACE) Matrix C) Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix D) Internal-External (IE) Matrix E) Quantitative Strategic Planning Matrix (QSPM) Answer: E Diff: 2 LO: 6: Construct and apply the Quantitative Strategic Planning Matrix (QSPM). AACSB: Analytical thinking

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Which stage is the strategy formulation framework focuses on generating feasible alternative strategies?

Which stage of the strategy formulation framework includes?

Which stage of the strategy formulation framework includes an IFE Matrix and the competitive profile matrix?

What are the four 4 phases of strategic framework?